May 11, 2004

Keepin' the ol hog clean

I see today that ICANN held a special board meeting to adopt one resolution.

One meeting, one worldwide phone bridge, one resolution.  It must have been an important resolution.

Let's take a look at that resolution, or more particularly, let's look at the "whereas" clauses that establish the foundation upon which this resolution is based.  Any errors in those foundations have the effect of weakening the resolution itself.

The third whereas says:

Whereas, the competitive registrar marketplace introduced by ICANN in 1999 has been successful in driving down prices to consumers and businesses for gTLD domain registrations.

Now I find that rather a strange assertion.  In fact it is my strong belief that ICANN's policies over the years have created a price support system that keeps domain name prices to consumers artificially high and has cost domain name consumers hundreds of millions of dollars over the last five years.

ICANN has established registry price floors that serve no purpose except to guarantee registry profits and to limit the range of competition among registrars.  ICANN has established expensive processes that provide no value to domain name consumers and which have utterly no role in support of ICANN's chartered purpose, the 24x7 reliable operation of the internet's domain name and addressing systems.  ICANN has established a body or rules that are a system in restraint of free trade that protects the incumbent domain name registries and registrars from competition from new innovative providers.

This whereas clause is a deception.  It is a fraud on the public.  It is very sad that ICANN's board still fails to recognize how badly ICANN has screwed up by creating a domain name "marketplace" that more resembles a Soviet Five Year Plan than an exercise in the free interplay of economic forces.

ICANN's claim that it has introduced competition and that consumers are now paying domain name prices that truely reflect a competitive market is nothing but hogwash.

One of original claims made for the existance of ICANN was that it would bring competition into the domain name system.  There is no doubt that ICANN has introduced limited registrar-registrar competition and that prices today are less than were paid to Network Solutions back in the early 1990's.  But along the way ICANN has created a heavy regulatory system that adds to registrar costs and neither encourages nor permits registry cost savings.  The path to full competition and fully competitive prices is a long one.  ICANN took one small step, sat down, and claimed victory.

There is substantial reason to believe that without ICANN's regulatory system the competitive price for long-term registrations could be far less than one dollar per year.  Even if that estimate is off a factor of 5x the numbers are still far less than paid by today's domain name customer.

It is very sad that ICANN continues to pass off its price support system for domain name prices as if it were some sort of victory for competitive economics.  It is even more sad that the United States Department of Commerce, which one would assume has expertise in matters of real competition, chugs down ICANN's claims and asks for more.

Posted by karl at May 11, 2004 4:27 PM